PETALING JAYA (THE STAR/ASIA NEWS NETWORK) - Investigators poring over the books of state investment fund 1Malaysia Development Bhd (1MDB) feel that almost RM13 billion (S$4.6 billion) of its assets that have been classified as available-for-sale cannot be easily liquidated.
As at March 31, 2014, 1MDB has assets amounting to RM51.41 billion of which almost RM19.5 billion are current assets that include cash and assets that are for sale.
Of the current assets, about RM3.85 billion is in the form of cash. But about RM1 billion of the cash cannot be utilised because of restrictions.
"Even assets that are being held for sale cannot be easily liquidated," said an investigator.
Investigators also say the financial position of 1MDB is unsustainable and it faced liquidity problems.
The Finance Ministry-owned 1MDB has debts of RM41.8 billion and Second Finance Minister Datuk Ahmad Husni Hanadzlah has said previously that it was facing cash-flow problems.
The investigators also said the external auditors who had been examining 1MDB's books did not verify the value of the assets held by 1MDB PetroSaudi Ltd before issuing their report giving the accounts of the fund a clean bill of health.
The external auditors also did not disclose material information on 1MDB's loans taken to finance its investments. The gains from investments were not verified.
1MDB PetroSaudi Ltd was a 40:60 joint venture between 1MDB and London-based PetroSaudi International Ltd that was dismantled about six months ago after it was set up in end September 2009.
After the joint venture was dismantled, 1MDB's 40 per cent equity in the company was converted to debt.
Investigators also revealed that between 2009 and 2014, 1MDB had to replace two of its external auditors due to disagreements with the management over the valuation of its assets.